Encyclopedia Classification
Category: Technical Indicators • Momentum Analysis • Oscillators
Discipline: Technical Analysis • Momentum Trading • Divergence Analysis • Market Psychology
Prerequisites
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Article 152 — Advanced Price Action: Reading Candles, Momentum, and Market Intent
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Article 161 — Trend Analysis: How Professionals Identify Trend Strength, Weakness, and Reversals
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Article 163 — Elliott Wave Theory: Understanding the Fractal Nature of Market Trends
Related Articles
MACD • Stochastic RSI • Momentum Indicators • Divergence Analysis • Moving Averages • Trend Analysis
Definition
The Relative Strength Index (RSI) is a momentum oscillator that measures the speed and magnitude of recent price changes to estimate whether an asset is gaining or losing momentum.
Developed by J. Welles Wilder Jr. in 1978, RSI ranges from:
0 to 100
Unlike trend indicators, RSI does not measure direction directly.
It measures:
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Momentum
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Rate of change
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Buying pressure
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Selling pressure
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Trend strength
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Potential exhaustion
Beginner Explanation
Imagine you're pushing a car.
The faster it accelerates, the more momentum it has.
Eventually:
The car may still be moving forward.
But it begins accelerating more slowly.
That slowing acceleration is often the first clue that momentum is fading.
RSI attempts to measure that concept in financial markets.
Price may still be rising while momentum quietly weakens.
Professionals pay attention to that difference.
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